Trans-Boundary Cooperation in the South Asia Power

Transcript:Trans-Boundary Cooperation in the South Asia Power:
Trans-Boundary Cooperation in the South Asia Power Sector: Opportunities and Challenges Mike Toman Manager, Environment and Energy Team Development Research Group, World Bank CUTS Regional Event, Kolkata, 7 August 2014 Disclaimer The results are preliminary and presented for the purpose of discussion only. 2 Why the interest in regional power integration? Short-term gains from ability of trade to relieve shortages Long-term gains from opportunity to utilize lower-cost generation at regional level Potential environmental gains – to the extent trade facilitates greater utilization of cleaner generation technologies 3 What is our approach? Quantitative analysis with long-term electricity planning model to simulate impacts, potential gains of cooperation Full regional cooperation Partial cooperation (Bangladesh, Bhutan, India, Nepal) Qualitative analysis of institutional and policy issues 4 Summary of baseline scenario Regionally capacity grows by a factor of 4 Baseline capacity growth is very coal-intensive in Bangladesh, India, Pakistan Least-cost technology CO2 emissions also grow (4X regionally) 5 Regional cooperation/trade Major increases in hydro (~30GW with full regional cooperation), displacing significant additions to coal capacity But still a lot of coal – drop in CO2 emissions relative to baseline is ~3% Significant additional investments in interconnection Allows more short-term capacity sharing as well as transmission capacity for major new hydro capacity 6 Gains from cooperation/trade Direct gains from trade are moderate in present value terms – ~US$20B over 2015-2040, discounted at 8% (real rate – fairly high) About 80% of this still is achieved with cooperation just among Bangladesh, Bhutan, India, Nepal Higher coal prices => significant additions to hydro capacity and trade, higher power costs Lower gas prices => some increase in domestic capacity and reduction in trade (in relative terms) 7 Why are the gains seemingly so modest? Trade is an incremental effect to the huge growth of regional capacity going forward All the increased hydro export to India in the analysis is ~5% of its total electricity use in 2040 Lying behind these discounted net benefit figures are some large positive impacts ~US$11B in additional generation and transmission CAPEX for trade facilitates ~US$28B in OPEX savings (undiscounted figures) 8 Why are the gains seemingly so modest? The baseline definition also matters We assume that current inefficiencies in domestic power sectors cannot be sustained; in particular, even without trade, persistent shortages are attenuated In work still to be done we are going to attempt to quantify the benefit of improved domestic sector performance